Gold ends losing streak, closing higher

Silver outperforms gold; platinum and palladium futures decline

V.Phani Kumar

SAN FRANCISCO (MarketWatch) — Gold futures put an end to a three-session losing streak Wednesday but barely finished higher, sticking to a tight trading range as concerns about the euro zone and, in turn, the health of the global economy constrained buyers.

Gold for December delivery
GCZ2, -0.05%
added 10 cents to settle at $1,765.10 an ounce on the Comex division of the New York Mercantile Exchange.

“With euro policy makers back to jawboning, not acting, and without a major central-bank decision until the [Federal Reserve] on Oct. 24, gold is looking listless at present,” said Adrian Ash, head of research at BullionVault. “It has already been stuck in a $40 range for almost four weeks now.”

The euro-zone crisis remains a dominant theme, as Spain so far refuses to seek help, and recently the International Monetary Fund also voiced concern about continuing capital flight from euro-zone peripheral countries. “Against this backdrop, the gold price remains well supported,” said analysts at Commerzbank, in a note.

Closer to home, after the regular Comex trading session ended for gold, the U.S. Federal Reserve reported Wednesday in its Beige Book report that the economy grew modestly across much of the nation in the past month. See: U.S. growth remains modest, Fed says.

Tight range

Gold’s most-actively traded contract, which has lost ground for three consecutive days after hitting an intraday high of $1,796.50 on Thursday, held to a narrow range between $1,770 and $1,758.50 Wednesday. On Tuesday, gold futures dropped $10.70, or 0.6%.

“With the market stumbling in sight of $1,800 an ounce, we believe that the path of least resistance is lower, at least in the near term,” HSBC analysts, led by James Steel, wrote in a note to clients.

The analysts said that although bullish calls on gold had nearly doubled in the past two months and stockpiles at exchange-traded funds have risen to record levels, additional monetary-policy easing in the U.S. and other countries was no longer a sufficient catalyst.

“We do not anticipate further significant buying of gold based on monetary-policy accommodation alone. In this light, the bullion market price could drop to $1,750 an ounce or lower in the near term,” they added.

The Commerzbank analysts said they don’t foresee any prolonged downswing in gold, “as this should be precluded in particular by continued inflows into the gold” exchange-traded funds.

“Over the past two days, ETF holdings have risen by a further 13 tons, 191 tons of gold having flowed into ETFs since the end of July,” said Commerzbank analysts. The bigger ETF interest in gold stems from ultra-loose central bank monetary policy, driving fears of reduced purchasing power, and currency devaluation.

The ICE dollar index
DXY, +0.52%
which measures the greenback against a basket of six major global currencies, fell to 79.923 from 79.973 in North America late on Tuesday.

Reuters

Platinum prices decline Wednesday.

A weaker U.S. dollar tends to offer some support for prices of gold and other dollar-denominated commodities, but the dollar index also briefly tapped a high above 80 Wednesday.

Other metals finished mixed

December silver futures
SIZ2, +0.00%
tacked on 12 cents, or 0.4%, to $34.11 an ounce.

December palladium
US:PAZ2
fell $8.30, or 1.3%, to $649.90 an ounce and platinum futures for delivery in January
US:PLF3
fell $16.80, or 1%, to $1,678.50 an ounce. December copper
HGZ2, +0.00%
closed unchanged at $3.72 a pound.

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